A business buys a generator for ₹12 lakh for its taxable operations. A government subsidy relatable to the asset covers 25% of its cost. The generator is acquired and put to use for fewer than 180…
Question and options
A business buys a generator for ₹12 lakh for its taxable operations. A government subsidy relatable to the asset covers 25% of its cost. The generator is acquired and put to use for fewer than 180 days in tax year 2026-27. At a normal 15% rate and with no additional depreciation, what depreciation is allowable for the year?
₹90,000
₹67,500
₹1,80,000
₹1,35,000
Answer and explanation
Section 39(2)(d) of the Income-tax Act, 2025 reduces actual cost by a government subsidy relatable to the asset, so the cost is ₹9 lakh, and section 33(4) restricts depreciation to half the rate for an asset put to use for less than 180 days in the year of acquisition: 7.5% of ₹9 lakh is ₹67,500. ₹1,35,000 ignores the half-rate rule and ₹90,000 ignores the subsidy.
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